Officials pleased there are more units in S.F. but worry that prices threaten diversity
While the number of new housing units built last year exceeded expectations, San Francisco still needs to boost the numbers to have any impact on rental prices and housing costs.
The cost of housing in San Francisco is notoriously high, having skyrocketed during the dot-com era of 1998-2000 when the average price of a three-bedroom house rose by more than $180,000 and the rent of two-bedroom apartment rose by $750, according to the Planning Department.
City officials worry housing prices threaten The City’s diverse community as working- and middle-class families find it increasingly difficult to keep afloat.
However, city officials are somewhat pleased with the progress in the number of new housing units being produced, since 1,872 were built in San Francisco last year, a 5 percent increase compared with 2004, according to a new housing inventory report. As of 2005, there were 355,918 housing units in San Francisco.
“We have been averaging 1,500 a year and we know that has not been nearly enough because supply has not kept up with demand,” said Gabriel Metcalf, executive director of San Francisco Planning and Urban Research Association, a public policy think tank. The City would need to start producing at least 3,000 units a year for a number of years before housing costs would decrease significantly, he said.
“The 1,870 is not nearly good enough and we need to get that number up,” acknowledged Matt Franklin, director of the Mayor’s Office of Housing.
Most agree the report shows signs that San Francisco’s housing stock will improve. One of the largest achievements last year was the construction of 800 affordable housing units, a 46 percent increase compared with 2004. Affordable housing is a term used to describe housing affordable to those who earn a certain percentage of the median income. For example, a studio rental is considered a low-income, or affordable, unit if the tenant’s salary is $53,200 — which represents 80 percent of the median income — and the monthly rent is $1,330, according to the report.
The 800 affordable units “certainly isn’t enough to entirely meet our needs, but it’s been a very productive year, one of the highest in years,” Franklin said.
San Francisco needs to construct about 2,700 housing units a year, including 1,000 affordable units, to meet its housing needs, according to The City’s Housing Element, a state law required planning document designed to ensure housing needs are met.
Franklin, however, was optimistic that the housing numbers will only increase, pointing to the large volume of permits issued last year for construction of units. In 2005, The City issued permits for the construction of nearly 5,600 housing units, a 141 percent increase over 2004. “For too long, The City has been the problem. They have been a bottleneck in the system,” Franklin said. The number of units cleared for construction indicates that the planning process has improved, according to Franklin.
It’s unclear how many of the 5,600 units will actually end up being built, but Franklin predicted a majority of them would come online within the next two years.